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State's solar surge powers Nova Consultants' growth

Photo by ROBERT CHASE
Nova Consultants Inc. had $3 million in annual revenue when President Sunil Agrawal saw a future in solar energy during the Granholm administration. Last year, Nova's revenue totaled $12 million.

Sunil Agrawal, president of Novi-based engineering and environmental company Nova Consultants Inc., saw a major opportunity to grow his business in October 2008 when then-Gov. Jennifer Granholm signed the state's new renewable energy bill.

Nova had been an engineering company with $3 million in annual revenue that focused mostly on environmental and construction management services.

But Agrawal, an immigrant from India who came to Detroit via Canada in 1987, realized his company had the engineering expertise and interest to take on solar projects that were on the cusp of exploding because of the new law. In 2008, the state approved the renewable energy bill that required utilities, including DTE Energy Co. and Consumers Energy Co., to generate at least 10 percent of their retail sales from renewable energy. Some 96 percent of renewable energy in Michigan is supplied through wind power.

In 2009, Nova submitted an RFP for a DTE Energy solar project for 60 kilowatts in Scio Township. Thirty-five companies submitted proposals, 10 were selected for review and Nova won the bid.

"DTE Energy gave us the opportunity and trusted us with an $18.5 million project. They supported us big-time," Agrawal said. "Solar is now 75 percent of our business."

After 23 projects with DTE totaling 11 megawatts and more than 14 projects with 1.8 megawatts for a growing number of private solar projects, Nova posted revenue of $12 million last year and projects more than $14 million this year, Agrawal said. Nova also provides ongoing maintenance services for eight solar projects with 515 kilowatts of power, he said.

Sunny business forecast

For DTE, Nova conducts feasibility studies of potential solar sites and calculates what size solar array can be supported in each area. DTE then decides whether or not to pursue the project.

If DTE goes ahead, Nova does the engineering work, procurement and construction. DTE then manages the ongoing operation.

Tony Tomczak, DTE's director of supply chain management, said Nova has met the engineering and generation expectations of the state's largest utility supplier of solar power. Nova is completing four projects and plans two more, he said.

Agrawal said Nova's designs and installation process have created 30 percent more power than DTE required as a minimum for each project.

Tomczak said DTE works very closely with Nova to generate "the best efficiencies we can out of the panels."

When DTE completes its planned solar projects, the Detroit-based utility will have 15 megawatts of owned solar power generation and 7 megawatts of customer-owned solar. In contrast, Jackson-based Consumers Energy projects about 6 megawatts of solar power for its projects by 2015.

But Michigan legislators have not yet committed to continuing investing in solar, wind or other renewable energy sources past 2015, when the state's renewable energy mandate ends.

So far, utilities that include DTE and Consumers Energy have spent $2.3 billion on wind, solar, biogas and other renewable energy power sources and are nearing their 10 percent goal.

The Michigan Legislature has started to hold hearings on extending the legislation, although most observers in Lansing don't believe any bills will be approved until next year.

A work group commissioned earlier this year by the Michigan Public Service Commission is studying ways to improve customer-owned solar projects through utility companies and whether to initiate community solar projects. A report is expected in July.

Sean Reed, founder and executive director of the Ann Arbor-based Clean Energy Coalition, said Nova Consultants fills a valuable role in Michigan to elevate solar power as a technology.

"Solar hasn't taken off in Michigan as in other parts of the country," he said. "It is a tough go for many companies in the industry to make it work. Nova is a great example for other companies because there is high value for utility-scale arrays."

Clean Energy is a nonprofit organization that helps bring together many types of companies in the renewable energy industry to expand the marketplace and lower costs for solar and other renewable technologies, Reed said.

Solar supply chain

Agrawal said Nova's solar contract with DTE and its growing number of smaller commercial contracts have helped to create a supply chain of 50 to 60 subcontractors in the solar installation and manufacturing industry in Michigan.

"There are a number of companies working in the solar manufacturing in Michigan, but we had to go out of state when we first started" with the DTE contract, Agrawal said.

For example, when Nova was working on the initial Scio Township project in 2010 for DTE, Agrawal said his company had to purchase solar racking parts from suppliers in Arizona. Racking helps to secure the solar panels to the posts.

"It was very expensive to ship (the components). We decided to design some of our own (solar components) and looked for local suppliers to give them the business," said Agrawal, who estimated Michigan companies may have created 200 jobs over the past several years to meet the solar demand.

Agrawal said Nova has doubled its staff to 40 since it received the DTE contract.

While most wind components that include blade, towers and turbines are manufactured outside of Michigan, Tomczak said, Michigan-based companies project much of the construction work for wind power generation.

"From DTE's perspective, the jobs created and sustained for wind is much more than solar," Tomczak said. DTE estimated that wind projects employ up to 100 workers during construction and another 10 people on-site during operations.

DTE estimates there have been 15 to 20 jobs created in the solar construction and engineering fields through DTE's solar program.

Randy Czubko, president of Valley City Sign, said the Grand Rapids-based manufacturing company produced mounting structures and posts for Nova's solar panel projects at the Ford and GM plants.

"Ford and GM had special requirements. They didn't want to bury the posts in the black top (parking lot) so we created the cement ballasts to hold the panels down," Czubko said.

The solar component work for Nova was the first of its kind for Valley City Sign, but Czubko said the company also is seeing a growing business for companies wanting stand-alone solar-illuminated signs.

"It's an excellent application for solar," he said. "It costs thousands of dollars to run a (power) line out to a sign. We can engineer a sign with a solar panel to charge the batteries with LED lights, and the customer can save money."

Mark Ferda, renewable energy account manager with McNaughton-McKay Electric Company, which has warehouses in Madison Heights and Ann Arbor, said the company expanded into solar seven years ago and has been growing its electrical distribution business at a 15 percent annual clip.

"We supply all of Nova's projects with DTE and do in excess of $1 million a year with residential and small commercial projects," Ferda said.

McNaughton-McKay sells solar panels, brackets, inverters and connectors and wires for the systems.

"The price of materials has come down by 50 percent since we started," Ferda said. "That has helped to stimulate growth, but if we lose the 30 percent federal tax credit in 2015 ... our business will drop 50 to 75 percent."

Adam Parr, account manager with Albion-based Patriot Solar Group, said his company began manufacturing roof and ground mounted structures for solar panels originally in 2005.

"We work in Michigan with Nova, but we do quite a bit of work in New Jersey and Massachusetts, where there are higher renewable portfolio standards and higher tax incentives," Parr said. "The tax incentives and state mandates really help to bring down the cost for these projects."